S79 - Targeted Quiz 7-12

NewPublicCo raises capital by selling shares to the public at $58.00 per share. The spread is equal to 6% of the total proceeds. What would be a reasonable estimate of the selling concession for this transaction?

$2.09 In this particular transaction, the gross spread = 6% x $58 = $3.48 per share, so the manager's fee and underwriting fee could be estimated to be about $.70 while the selling concession would be closer to $2.09 (20% of the gross spread).

Rule 504 of Regulation D allows companies to sell a maximum of

$5 million in a 6-month period

An OTC issue has an average daily trading volume of 10,000 shares. During a restricted period, a passive market maker may not exceed what level of net purchases per day?

3,000 shares

ABC Corporation has one million shares of common stock, of which the public float is 900,000 shares. To qualify for an S-3 filing, what is the maximum amount of common shares that the company may have sold under an S-3 in the previous 12 calendar months?

300,000 shares or 1/3 in a 12-month period.

The issuer of a private offering prepares offering documents to inform qualified investors and facilitate subscriptions. When must the offering documents be submitted to FINRA?

At or prior to the time they are made available to any investor

Which one of the following statements about stabilizing bids is not true?

Both underwriters and selling group members can place stabilizing bids.

Which one of the following issuers may qualify as a well-known seasoned issuer (WKSI)?

Foreign issuer

If an officer or director acquires additional shares after filing Form 3, those changes must be reported on

Form 4

A stock market investor focuses on buying companies that are growing their earnings steadily, at a rate that exceeds the stock market as a whole. In addition, the investor wants to see that these stocks are selling at price/earnings ratios below the market average. This strategy is known as

GARP Growth at a reasonable price.

Competitive bids provide issuers with all of the following benefits EXCEPT

Higher dollar amount raised

FINRA Rule 2269 requires members acting as brokers or dealers to give customers a written notice of interest for which of the following transactions?

I. Primary offerings II. Secondary distributions III.Securities in accounts advised for a fee

In regard to the prohibition on transactions in IPO shares by restricted persons with beneficial interest, whom do the 'anti-dilution provisions' protect?

Pre-IPO investors

Garrison is a registered rep affiliated with ABC Securities, a broker-dealer. He tells his client that she can buy shares in a hot IPO "at the market." ABC Securities is participating in the IPO as an underwriter. In which case is this statement permitted by regulation?

Shares are bought in the secondary market on an agency basis.

Which of the following statements is true about the 10-Q filing deadlines of large accelerated filers, compared to accelerated filers?

The filing deadline is the same for both

To fall under the Rule 168 exemption, communication made by or on behalf of an issuer must be factual or forward-looking. What other requirement must be met?

The issuer must have met all SEC reporting requirements.

For purposes of a stabilization bid, the "principal market" is defined as

The market with the largest aggregate volume for this class of securities over the last 12 months (Reg M)

In a fixed price IPO, FINRA Rule 5130 requires the book-running underwriter to file with FINRA a final list of distribution participants and their commitments, by what deadline?

Three days after the offering date

ABC Grocers, Inc. is a private company that wishes to raise investment capital from its thousands of customers in small amounts via crowdfunding. Its target raise is $500,000. By regulation, what is the maximum number of investors to whom it can sell stock in a crowdfunding offering, assuming the target is reached?

Unlimited

Patsy is a director of ABC Corp., a public company, and she holds 10,000 shares of its stock. The current stock price is $40. If she plans to sell 2,000 shares during the next three months, is she required to file a proposed notice of sale with the SEC?

Yes, because the dollar value of the proposed sale exceeds the limit. Affiliates must file Form 144 with the SEC if a proposed sale of control stock exceeds either 5,000 shares or an aggregate dollar amount of $50,000 in any three-month period.

Which one of the following items is not required to be published in a prospectus?

the lead manager's fee